Credit Writedowns » Financial Institutions

ELA Does not Stand for Exaggeration, Lies and Assumptions

Marc Chandler — Tue, 22 May 2012 16:47:23 +0000

ELA is the acronym for Emergency Lending Assistance. This is direct lending by the national central bank, with ECB authorization to local banks with more liberal collateral requirements. The national central bank is responsible/liable for the funds not the euro system. Last week when the ECB announced that four Greek banks were no longer able to borrow from the ECB, this forced them to borrow from the Greek national central bank's ELA facility. This in turn created confusion and all sorts of imaginary thinking

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Goldman CEO Lloyd Blankfein on Bloomberg Television

Edward Harrison — Wed, 25 Apr 2012 18:30:23 +0000

Bloomberg TV spoke to Goldman Sachs CEO Lloyd Blankfein today in a much discussed interview. Below is the video and partial transcript of that interview. I provide it without comment

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Chart of the day: year over year growth in Greek deposits of non-financial customers

Sober Look — Wed, 25 Apr 2012 13:30:49 +0000

The Greek private sector can generally only rely on the Greek banking system for credit. At the same time the Greek private sector is moving liquidity out of the country, dramatically shrinking the availability of credit

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Chart of the day: year over year growth in Greek deposits of non-financial customers originally appeared on Credit Writedowns

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Judging by Ireland, Spanish banks to take a lot more credit writedowns

Sober Look — Mon, 23 Apr 2012 18:00:23 +0000

Ireland dealt fairly quickly with its property market bubble by effectively and forcefully nationalizing and recapitalizing its banking sector. They clearly still have a serious problem on their hands, but the nation has been aggressive in addressing the issue of distressed real estate loans. In contrast, Spain's banking system is nowhere close to fully recognizing the full extent of the problem. Not facing the problem however is not going to make it go away

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More on why Minsky matters

Randall Wray — Mon, 02 Apr 2012 15:46:31 +0000

In Paul Krugman’s view, banks are not very important since all they do is to intermediate between savers and investors, taking in deposits and packaging them into loans. Now, I know that Krugman’s own specialty is not money and banking, so one would not expect him to have a deep understanding of all the technical details. However, he is an important columnist and textbook writer, so if he is going to expound upon “what banks do”, he should at least have the basics more-or-less correct. But he doesn’t. we need Minsky—whose views even from the 1950s are far more relevant to today’s real world banks than are Krugman’s

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Full text: Moody’s takes actions on seven Portuguese banks; Outlook negative

Edward Harrison — Thu, 29 Mar 2012 02:27:41 +0000

The following is the text of a ratings action on Portuguese banks initiated today

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On bank lending’s creating deposits and Paul Krugman’s response

Steve Keen — Wed, 28 Mar 2012 20:52:14 +0000

Alan Holmes wrote in 1969 that "in the real world, banks extend credit, creating deposits in the process, and look for the reserves later." Holmes would turn in his grave at Krugman’s naïve assertion, half a century later, that banks need deposits before they can lend. Bank lending creates deposits. That’s why banks matter in macroeconomics, and it’s not “Banking Mysticism” to point this out

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The worst anti-regulatory travesties in the financial sphere have had broad, bipartisan support

William Black — Tue, 27 Mar 2012 17:46:01 +0000

The imminent passage of the fraud-friendly JOBS Act caused me to reflect on the fact that the worst anti-regulatory travesties in the financial sphere have had broad, bipartisan support. The Garn-St Germain Act of 1982, which deregulated savings and loans (S&Ls) and helped drive the debacle, was passed with virtually no opposition. The Texas and California S&L deregulation acts – the two states that “won” the regulatory “race to the bottom” – passed with virtually no opposition. Texas S&L failures caused over 40% of total S&L losses and California failures caused roughly 25% of total losses. In 1984, a majority of the members of the House of Representatives, including Newt Gingrich and most of the leadership of both parties, co-sponsored a resolution calling on us to cease our reregulation of the S&L industry

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The JOBS Act will create an extraordinarily criminogenic environment

William Black — Mon, 26 Mar 2012 12:30:42 +0000

The JOBS Act is insane on many levels. It creates an extraordinarily criminogenic environment in which securities fraud will become even more out of control. One of the forms of insanity is the belief that one can “win” a regulatory “race to the bottom.” The only winning move is not to play in a regulatory race to the bottom. The primary rationale for the JOBS Act is the claim that we must win a regulatory race to the bottom with the City of London by adopting even weaker protections for investors from securities fraud than does the United Kingdom (UK)

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Smoking Gun at MF Global

Edward Harrison — Sat, 24 Mar 2012 11:00:18 +0000

Bloomberg News allegedly has an e-mail demonstrating that Jon Corzine, MF Global's CEO, gave “direct instructions” to his underlings to transfer $200 million from one customer account to another account in order to meet an overdraft in one of the company's JPMorgan Chase London accounts

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